Markets to consolidate with a somber start on weak global cues

The Indian markets showing mostly a steady trade moved further high in last session. Today, the start is likely to be somber and some fatigue is likely to appear on the Indian markets too, amid weak global cues. The post-Brexit relief rally seems to be fading worldwide and demand for safe-haven assets is once again increasing. Traders will be concerned with a private report stating that investments in projects remained elusive in the first quarter of the financial year 2016-17 with stalled projects running into an estimated Rs 11.2 lakh crore. The report has further said that most of the stalled projects are in the electricity (31%) and steel (25%) sectors. Meanwhile, the SBI Chairman Arundhati Bhattacharya has said that Brexit is “not good” for the world, as becoming less inclusive and less connected is not the right thing and nations will benefit more by globalization. Markets may get some support with Finance Minister Arun Jaitley’s statement, who calling India a 'sweet spot' in the subdued global economy has said that indication of “good rains” will further boost the country’s growth momentum. Also, an India Ratings report has said that the Reserve Bank of India has successfully turned the banking system to neutral from a high cash-crunch zone three-four months ago. Power stocks will keep buzzing on report that power generation growth has been 9.5 percent this year so far, which is almost double of 5.65 percent achieved during 2004 to 2014. Traders will also be eyeing the expansion of the Union Cabinet, and some industry specific actions can be seen on ministry allocations.

The US markets remained closed in last session, unable to give any cue to the other global markets. The Asian markets have made mostly a lower start, declining for the first time in last one week of trade, as commodities turned weak and on cautiousness with the possibility of bank bailouts in Italy. Japanese market too has snapped its six days winning streak on strength in yen.

Back home, Indian equity indices showcased yet another euphoric performance on Monday, as investors’ mounted more bullish bets amid good progress in monsoon rains and firming Asian cues. Heavy showers during the weekend have lifted monsoon out of the 'deficient' zone, the first real signal of a good kharif harvest that should lower food inflation and pave the way for a cut in interest rates.  The season's rainfall deficit has contracted to only 6% from a worrying 25% two week ago. Besides, appreciation in Indian rupee against the dollar too aided sentiments. Indian rupee firmed up on fresh selling of the American currency by exporters. Some support also came with the report that foreign investors brought in over Rs 3,700 crore into Indian stock markets in June, taking the total to more than Rs 20,600 crore so far this year. However, investors remained cautious with RBI Governor Raghuram Rajan who warning against expecting too much from central banks, stated that it is wrong on their part also to always claim a ‘bazooka’ left up their sleeves. Rajan further stated that the ability to get a coherent economic policy in this environment is much more limited that what we have been experiencing for so many years in the past. On the global front, Asian markets ended in green on Monday as commodity producers rallied, while Stocks in Europe slipped in early trade. Back home, the local benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. Thereafter, the key indices capitalized on the momentum and touched intraday highs in early noon session as participants indulged in broad based buying. But the optimism soon started showing signs of easing in late hours of trade and profit booking in few sectors appeared after European markets drifted lower. Finally, the BSE Sensex surged by 133.85 points or 0.49% to 27278.76, while the CNX Nifty rose 42.35 points or 0.51% to 8,370.70.